straighttalk on paying for college

7/27/2019 StraightTalk on Paying for College

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STRAIGHT TALK ON

PAYING FOR COLLEGE:Lowering the Cost of Higher Education

by Trent Anderson and Seppy Basiliwith Allen Plummer


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Kaplan Publishing

Published by Simon & Schuster

1230 Avenue of the Americas

New York, NY 10020

Copyright 2003, by Kaplan, Inc.

All rights reserved. No part of this book may be reproduced or transmitted in any form or by any

means, electronic or mechanical, including photocopying, recording, or by any information storage

and retrieval system,without the written permission of the Publisher, except where permitted by law.

For bulk sales to schools, colleges, and universities, please contact Order Department, Simon &

Schuster, 100 Front Street, Riverside, NJ 08075. Phone: 1-800-223-2336. Fax: 1-800-943-9831.

Kaplan is a registered trademark of Kaplan, Inc.

Editor: Larissa Shmailo

Educational Research Manager: Jessica Shapiro

Cover Design: Cheung Tai

Interior Page Design and Production: Hugh Haggerty

Production Editor: Jessica Shapiro

Production Manager: Michael Shevlin

Managing Editor: Da Alessandro

Executive Editor: Del Franz

Special thanks to Angela Cress, Laurel Douglas, and Rudy Robles

Manufactured in the United States of America

Published simultaneously in Canada

September 2003

10 9 8 7 6 5 4 3 2 1

ISBN: 0-7432-4109-6


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___________________TABLE OF CONTENTS

Trent & Seppy Say... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . vii

Part One: The Financial Aid ChallengeChapter 1 Getting Started . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3Chapter 2 Financial AidMyth versus Fact. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9

Chapter 3 Finding the Best Value . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17

Chapter 4 Calculate the Real Cost of College . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29

Chapter 5 Making the Most of Your Money. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .43Chapter 6 Get Your Share of Student Aid. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .55

Chapter 7 Navigate the Process. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .75

Chapter 8 How Youre Evaluated. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 111Chapter 9 Compare and Negotiate Aid Packages . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .135

Chapter 10 Meet Your Share of Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 147

Part Two: Financial Aid ResourcesSection 1: Regional Resources. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 163

Section 2:Website Reference List . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 175

Section 3: EFC Worksheets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 177

Section 4: Sample Appeal Letters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 194Section 5: Glossary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 197

Part Three: How Much Will It Cost?Financial Data for 328 Popular Schools . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .211Index . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 257


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TRENT & SEPPY SAY

Hi, were Trent and Seppy, and were here to offer you some straight talk about (gulp!) paying forcollege. Lets face it: To make smart decisions about how to pay for your students (or plural,students!) education, you need more than just wishful thinking. And you dont need to face whatmay look like an overwhelming maze of forms, loans, tax information, and ever-growing college

costs alone. So we created Straight Talk on Paying for College: financial aid and money managementstrategies you can use written in plain language and presented in simple, step-by-step terms. And we

threw in some laughs (yes, its not all bad news!) to help you through this process. You deserve it!

Want to figure out what the real cost of college will be for your family? We broke down the costs,direct and indirect, including all those miscellaneous items you may not have thought of, and

asked parents of college-age studentsreal people like youhow they paid them. Want to knowhow to apply for financial aid and get the best package? We asked financial aid officers at some ofthe nations top colleges to tell us. Want tips on saving for college and what tax breaks may be outthere for you? Weve given you the latest on 529 plans, Education Savings plans, and tuition taxcredits. Want to know how to pay the bills that financial aid wont cover? We show you your optionsfor meeting your sharewithout going broke.

And of course, weve also included our own personal advice and insights throughout this book.Why should you listen to us? During our careers, weve worked with thousands of families, helpingthem with financial aid advice, test prep, and college admissions. Our comments are based on ourown experience and what weve learned by speaking to students, their parents, and collegepersonnel throughout the years.

So relax (its okay!). Well take you through the steps, with checklists at the end of each chapter tokeep you on your way.Well point out the mistakes that others have made, and help you avoid them.And well save you some money, too. Now, thats not bad!

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Trent Anderson is the Vice President for Education at Cablevision, Inc., where he oversees thePower to Learn initiative. Before joining Cablevision, Trent was the Vice President of Publishing

for Kaplan, Inc., where he developed book projects for the education market. During his 10 yearswith Kaplan, Trent was a test prep instructor, admissions advisor, financial aid expert, and authorand contributing editor of several books, including Once Upon a Campus, The Unofficial, UnbiasedGuide to the 328 Most Interesting Colleges, and Kaplans precollege and pregrad school test preptitles. Trent spent his college years in Southern California, where he earned his bachelors degree atUCLA and his J.D. and M.B.A. at the University of Southern California. Prior to working at Kaplan,

Inc., Trent taught undergraduate business law at the University of Southern California.

Seppy Basili, Kaplans resident College Guru, has been analyzing college trends for more than 15years. During his Kaplan career, Seppy has overseen Kaplans test preparation programs andpublications for the SAT, ACT, and PSAT exams as well as college admissions services. Along withTrent Anderson, he is the co-author ofOnce Upon a Campus and The Unofficial, Unbiased Guide to

the 328 Most Interesting Colleges. He also founded the Kaplan-Newsweek imprint publications,which include the annual How to Get Into College guide. Seppy has spent many years on collegecampuses, receiving his B.A. from Kenyon College, M.Ed. from the University of California

Berkeley, and J.D. from Emory University.

As a financial journalist, co-author Allen Plummer has written for Bloomberg, Morningstar,

AOL/Time Warner, The Bureau of National Affairs, and Thomson Media. He regularly contributesto several financial trade publications.A graduate of Virginia Commonwealth University, he plans toreturn to school for his MBA in the near future. Allen lives in Richmond,Virginia with his wife, Sara.

This book was reviewed byJade Kolb, financial aid manager for New York University, who served as

a consultant in its production.

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PART ONE

THE

FINANCIAL AID CHALLENGE


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One of the most important contacts you can make at your students college is the financial aid office.Connie Gores, vice president for enrollment, Randolph-Macon Womans College

Odds are, youve picked up this book because you have a child whos getting ready to go to college.Youve probably looked at some schools, flipped through a few college catalogs and viewbooks, andtried to get a sense of what this grand, life-changing experience for your student is going to cost.

Then again, maybe youve been afraid to find out. (Ifso, we cant say we blame you.) The truth is, theresgood news and bad news. Since most people prefer toget the bad news over with, we might as well get thatout of the way.

Unfortunately, the cost of a higher education is risingevery year and will almost certainly continue to do soin the future. Just as the costs of cars and homes haveincreased over the past decades, so has the cost ofattending college.

(Our apologies if that last sentence was difficult toread, but we promise it gets better.)

THERE IS HELP

The good news is that theres help all over the place if you know where to look. The government,businesses, foundations, and even universities offer ways to help manage and reduce the cost ofgetting a higher education. Despite the price, there are people who can and want to help you and

your student afford college. After all, getting a college degree not only benefits your student, but therest of society as well.

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CHAPTER ONE

Getting Started

Starting Early

I suggest students and families visit afinancial aid office as early as eighthgrade, or when the student is a

freshman in high school, offers JackToney, director of financial aid atMarshall University. It gives families achance to get an overview of what toexpect to pay for college, and theyllhave a few years to prepare.


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And lucky youyouve already found one source of help. This book was created solely to help youand your son or daughter understand and get through the process of finding and applying for

financial aid. But before we dive in, there are a few things you should know up front.

GETTING A GAME PLAN

First, this isnt a weekend project. Theres a reason we

compared college to buying a home or car, and thatsbecause it takes the same amount of time, effort, andplanning. Most people wouldnt buy a car withoutsome shopping around and number crunching, and

you certainly wouldnt buy a house without doingresearch. The same should be true for college. Since

your students education will likely cost as much as anew car (or even a house!), doesnt it make sense toput as much time and energy into the process as youwould for those decisions?

Also, youll be glad to know that your student will need to become involved in this process.Although you may claim them as dependents on your income taxes, you cant do this alone. There

are going to be plenty of discussions and decisions that will involve talking (gasp!) to your son ordaughter. Affording college is about things like budgets, living expenses, and spending money.Getting your student involved will help them realize the financial burden of college. And if yourelucky, they may take their education more seriously as a result.

Finally, this book will encourage you to be proactive.

Not only will we explain the process and use the reallife experience of other parents to help youunderstand how it works, but weve created anumber of things to nudge you along the way. At theend of this chapter, youll find a calendar to help pace

yourself for going through the financial aid process.

While we dont live in a perfect world, it representsan ideal timeline for getting things done. Weve alsoincluded short checklists at the end of each chapter

to suggest things you and your student should bedoing along the way. Theyre by no means comprehensive, but its a good place to start. A handfulof worksheets and tables will help make life easier than guessing and estimating costs in your head.Weve also done a lot of legwork to find other resources so you dont have to. Websites, phone

The Financial Aid Challenge

4

Look at Financial Aid

Families should look at financial aidoffices when comparing universities,says Jade Kolb, manager of financialaid at New York University. Theyshould ask questions such as, howlong are lines for requests, and is iteasy to speak with someone on the

phone? These kinds of inquiries giveyou a good idea of how helpful afinancial aid office can be.

After the Fact

People think they can get money laterin the process, so often a student getsin, then the family asks for financial aidafter the fact, says Ellen Frishberg,director of Student Financial Services,Johns Hopkins University. It happensall the time.


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numbers, and contacts are plentiful throughout this book, so youll always have places to findadditional information.

YOU ARE NOT ALONE

Remember youre not alone in this process; millions of other American families are going throughthe same steps and facing the same problems. Even financial aid officers send their kids to college.My daughter is a senior in high school, and Ive been helping her friends families compare their aidpackages, says Connie Gores, vice president for enrollment at Randolph-Macon Womans Collegeand parent of a high school senior. Theres a lot of confusion and incorrect assumptions out there.A lot of parents also dont understand the differences between a public and private college. Also, Imlearning that a lot of families dont understand the financial aid process, so there really are a lot ofpeople out there that need help and guidance. She

adds, The one thing that surprised me, evenbeing in this field, is the anxiety this process cancreate. Theres an immense amount of pressure onstudents and families during the whole process,and I never realized it until I went through itmyself.

There may be times when dealing with financialaid feels like balancing your checkbook, doing

your taxes, and taking a test all at once.Understanding the process is half the battle.

When it comes to financial aid, knowledge ispower, and this book will give you the

information and guidance you need to make thebest decisions to help you pay for the bestpossible education your son or daughter canhavewithout going to the poorhouse.

MOVING ON

In the next chapter, well tackle the reality of financial aid, and separate the myths from the facts

(and its not all bad news!). Well also discuss some misconceptions to help you learn the truthabout financial aid.

Getting Started

5

TRENT & SEPPY SAY

Trent:

Depending on where you live, some collegefinancial aid officers come to speak at highschools and educate parents.

Seppy:

West Virginia, for example, has a

state program to do just that. Infact, Marshall University, inHuntington, W V, encouragesstudents as young as high schoolfreshmen to come in with their

parents and learn how to preparefor college!


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6

CHECKLIST:

1. Review the following financial aid calendar. The information in this book will guideyou through this process, so set up a schedule for working through it chapter bychapter that works for you.

2. Attend College Nights. The majority of high schools in this country hold eveningswhen representatives and alumni from various universities come to your high school.These events give you an opportunity not only to learn about the colleges, butpossibly get some preliminary financial aid information.


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FINANCIAL AID CALENDAR

Getting Started

7

August Begin looking and applying for

scholarships and grants. Begin talking about the types of

colleges you might be interested in. Create or narrow your list of

prospective schools, including dreamand safety colleges.

Request applications and catalogs fromprospective colleges.

Create folders for prospective colleges. If necessary, take the SAT again.

September Begin asking for letters of

recommendation for collegeapplications.

Compare the costs of colleges in yourstate, as well as other states yourstudent is interested in.

Begin looking at your familys budget,and find ways to save money or cutexpenses in light of upcoming collegecosts.

Find out which financial aid applicationsyour prospective colleges require, andrequest them.

October Continue looking and applying for

scholarships and grants. Attend College Night at your high school. Visit prospective colleges and financial

aid offices. Complete a Cost of Attending worksheet

for each school you are considering. Register for the CSS Profile (if necessary). Contact your states higher education

agency to find out what state grantsand loans are available.

Request paperwork for any programsyou are interested in.

November Send in Early Decision application, if

applicable. Contact your employer to determine if

your student will continue to becovered under your insurance.

Review your investments to find waysto help pay for college. If you have afinancial advisor, meet with them tobegin planning for college costs.

December Continue looking and applying for

scholarships and grants. Begin educating yourself about various

types of student loans. Fill out and file CSS Profile form, if

necessary.

January Complete and file federal income taxes. Submit your FAFSA as soon as possible. Complete admissions applications. Complete any state, institutional, and

other financial aid forms necessary.

February Continue looking and applying for

scholarships and grants. Call each potential college to verify that

your applications and financial aidinformation are complete.

Begin contacting lenders about varioustypes of student loans. Compare ratesand terms for later use.

March Review your SAR, and make corrections

if necessary. Provide verification information to

colleges, if necessary. If youre interested, request and

complete the necessary forms forcalculating Federal Methodology andInstitutional Methodology, either inpaper or online.

April Continue looking and applying for

scholarships and grants. Begin receiving award letters and

financial aid packages from colleges. (Besure to note deadlines for acceptance.)

Compare packages, and negotiateoffers if necessary.

If your student has received any outsideor private aid, notify your colleges andfind out if it will impact aid packages.

Accept award package from the collegeyoull be attending.

Notify other colleges you will not beattending.

May Watch for housing information from

your college, as well as other financialaid paperwork.

Contact the college your student isattending to find out key dates in thepayment cycle.

Request information about yourcolleges tuition payment plan.

June Continue looking and applying for

scholarships and grants. Make sure final high school transcript is

sent to your college (if necessary). Research various types of loans to

determine which is best for you andyour student.

Complete loan paperwork and prepareto pay tuition bill in near future.

July Receive and pay tuition bill from

college.


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When was the last time you bought something at full price? If youre like most people, the answermay take a little bit of thought. As Americans, we are a nation of bargain seekers and coupon

clippers, and as such, companies know that with all the options out there, theyd better give us agood reason to put down our hard earned cash for their product.

Its not surprising, then, that we live in a society of discounts. Televisions and radios bombard us

with ads proclaiming no money down, no payments for twelve months, or get 50 percent off.To make things even more interesting, the Internet has become a great tool in increasing peoplesbuying power. Comparison websites and online services mean that hardly anyone need pay fullprice these days.

And although colleges dont always advertise, a wonderful similarity exists.

Almost no one pays the full cost of a college education, which is a good thing since the skyrocketingcost of a higher education may cost as much as your home. Of course, if youve already seen thefigures for your prospective colleges, youre well aware of this. Lets take a look at what drives theserising costs.

WHY IS COLLEGE SO EXPENSIVE?

Over the past few years, our economy has faced increases in unemployment, large drops in the stockmarket, significant international policy issues, and just about any other type of money problem youcould name. As 2003 started, almost every state in the nation faced budget cuts from the federal

government. As youre probably aware, this has impacted the amount of money states passed on tocolleges. In turn, these colleges were forced to make do with less money by cutting expenditures andraising the cost of tuition and expenses. To make a long story short, college is more expensive thanever before.

9

CHAPTER TWO

Financial Aid

Myth Versus Fact


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But what you may not know is that its not necessarily that simple. The cost of going to collegecontinues to rise because of a number of factors:

Just as higher energy prices means a higher electric bill for you, colleges are also payingmore for utilities. As campuses grow in size and student populations increase, moremoney is needed for maintenance, food, and housing. And of course, colleges compete forstudents by offering high quality educations, so any cost that will keep a schoolcompetitive is a priority.

As our economy takes a hit, alumni are less likelyto donate to their alma mater. Foundations thatsupport universities through regular donations

have found themselves with less money to give.Corporations that may support college programs

or pay for new buildings have found they cantafford to make such gestures when their businessis suffering.

THE BARGAINS

San Diego State Universitys in-state tuition is $2,014 and out-of-state tuition is $8,902 (20023).

CUNY John Jay School of Criminal Justice is $3,309 in-state and $6,509 out-of state (20023).

University of California schools have no in-state tuitionbut look out for fees that hike them up tonumbers like $4,200 (Berkeley) and $4,378 (Los Angeles).

Berea College is a Christian college in Appalachia which requires all students to work on campus butgives everyone a full scholarship for tuition.

The College of the Ozarks provides mandatory student work and private/federal scholarships to make itfree for everyone.

Cooper Union students get full tuition scholarships.

At military academies like West Point and Annapolis your degree is freeexcept for servicecommitments of five years or more.

YES, THIS IS ONLY FOR ONE YEAR . . .

Kenyon University $30,330 (200304).

Sarah Lawrence $29,360 (20023), (George Washington University $29,350, (20034).

MIT $29,130 (20023).

Washington University in St. Louis $29,053 (20034).


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Public Problems

College tuition and fees at publicuniversities increased as much as 24percent from 20012002 to 20022003.

Source: National Center for Public Policy and

Higher Education


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Universities need to offer salaries that attract well-established researchers and professors withterminal degrees (Ph.D.s, M.B.A.s, and J.D.s). Just as businesses today need I.T. professionals,

improvements in college technology require a knowledgeable workforce to maintain and fix it.Administrative and legal needs continue to grow as colleges must comply with the ever-changingand complex state and federal regulatory requirements. Any addition, change, or improvement to acollege results in some kind of increased expense.

And perhaps most importantly, the growing expectations of a higher education push colleges to

continue spending. No longer is it acceptable for a colleges library to be open until 10 or 11 P.M.Instead, libraries are often open 24 hours a day. Likewise, its not enough to have each dorm roomwired for telephones and dial-up Internet access; when it comes to a colleges technology, things likeDSL connections are rapidly becoming the norm. As a college, if you dont offer those things, then

youre not able to compete with other schools, explains Karen Krause, director offinancial aid atthe University of Texas at Arlington. The expectations are already there. Unfortunately, none of

these costs are included in financial aid.

These expectations for improved libraries, athletic facilities worthy of a pro football team, cutting-edge technology, sophisticated laboratories, and top-notch student centers all are causing schoolsto spend more money each year, as funding from both public and private sources continues to drop.Its going to get very interesting, continues Krause, Texas is facing budget shortfalls at the same

time colleges here are experiencing growth in enrollment. If things continue, at some point it willhave to reflect service. It has already been reflected in tuition.

While all these factors arent going to affect the process of applying for financial aid, it will be toyour benefit to stay informed about them. As someone with a son or daughter in college, things

like state education cuts, college programs, and teacher salaries will affect how much you pay foryour students education. And as someone who pays for these things, your opinion matters.

THE MYTHS OF FINANCIAL AID

Have you ever started your car and thought, Ive got plenty of gas, only to have the engine cut offminutes later? How about writing a check as you tell yourself, Theres probably enough in theaccount to cover it, only to have the check bounce days later?

At one time or another, weve all made assumptions that turn out be wrong, and although you maynot realize it, people make assumptions about financial aid that are incorrect as well. Just as

bouncing a check can cause frustration and headaches, so can believing these myths. So to saveyourself trouble and worry down the road, lets clarify these assumptions.

Financial AidMyth Versus Fact

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Do you expect financial aid to pay

for everything?

Financial aid is just what it claims to beassistance.By assuming that government and state financial aidprograms will pay 100 percent of your sons ordaughters education, youre making a dangerouserror. The purpose of these programs is to helppeople afford college, which is completely differentfrom saying, I cant afford college, so the

government will have to pay for it. Parents andstudents who think this way are in for a harsh wake-up call.

Do you rely on financial aid to afford

college?

This is a common assumption, even though most families qualify for some sort offinancial aid. Theproblem is, right now you dont know how much financial aid youll receive. If youre fortunate,

your son or daughter may have a significant amount of their education paid for throughscholarships, loans, and/or grants. Other families find that financial aid covers only half, if not less,of the cost of college. So while expecting financial aid is one thing, relying on it to cover themajority of expenses associated with your students college experience is risky.

Many families Ive talked to dont think about financial aid until after they receive their aid

packages, explains Connie Gores, vice president for enrollment for Randolph-Macon WomansCollege. Once they get them, then they want to know how they can get additional assistance. Theydidnt consider aid as part of the application process.

Do you expect to make a financial sacrifice for your students

education?

Financial aid is based upon your familys ability to pay for school, not how much youre willing topay. As youll soon find out, state and federal programs use your income tax to determine howmuch financial aid you qualify for. To do this, they determine your Expected Family Contribution

(EFC) using these numbers. The EFC is your responsibility for your students education, andfinancial aid provides assistance in covering part, most, or all of the difference. So even though youmay disagree with your EFC, its non-negotiable. Just as you cant change your tax rate because youneed the extra money, you cant change your EFC because you dont have the money handy.


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Hearsay

Im amazed how many studentsapply to certain colleges because ofthings they hear, says Connie Gores,vice president for enrollment,Randolph-Macon Womans College.Parents can oftentimes be the same

way, and it seems that many familiesapply to schools having done verylittle research. Then once they getaccepted to these schools, financialaid becomes important. Really, it

should be an important part of theselection process.


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A big misconception is that your EFC is what youll pay for college, and thats really not true, saysJade Kolb, manager offinancial aid for New York University. Its a government analysis, and it may

be the same as the amount youll pay, or it could be more or less depending on the school.

The Department of Education is planning to change federal EFC calculation in fall of 2004. Notsurprisingly, the change is going to cost you and your student money. See chapter eight for moreinformation on this important development.

Do you assume your financial

status doesnt matter to colleges?

The good news is that to some, it does. Currently,federal and state financial aid programs are not

able to keep up with the rising cost of education.An increasing number of colleges recognize theimpact this has on lower-income families andconsider a familys financial status before awardingfinancial aid. This practice is called need aware,

while colleges that do not use a familys financialstatus are considered need blind. Also, manyschools that are need blind offer merit-based aid asa way of providing financial aid to top studentsregardless of their families income.

The main reason for clarifying these myths is soyou wont make any costly and frustrating decisionsdown the road. The bottom line is, instead of making assumptions about financial aid, you shouldprepare to contribute as much as you can to your students education. (Well help you figure outhow to do this later on, so dont worry.)

STICKER SHOCK

Colleges are like carssort of. Coming to this realization is a lot like going car shopping. You seesomething you like, you look inside, kick the tires, and maybe take it for a test drive. But once youtake a glance at the price sticker on the side window, your heart almost stops beating, you gasp, and

begin to wonder just how long it would take to bicycle to work.

Its called sticker shock, and once you see the cost of tuition and board at your students favoriteuniversity, youll probably feel the same way. It used to be that the most expensive purchases afamily could make would be a house and a car. Today, its a house and college, with a car just behind


13

TRENT & SEPPY SAY

Trent:

Your Expected Family Contribution (EFC) is goingto be one of the most important parts of thefinancial aid process, so youll hear the term oftenthroughout the book. Remember that EFCsimply means the amount youre expected to payfor college.

Seppy:

I always thought EFC meantEvery Final Cent.


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them. In fact, according to the College Board, which administers the SAT exams, the annual cost ofattending a four-year public university in 2002 was $9,663 for a student who lived on campus.

Students who lived on campus at a private college averaged $18,273. Multiply that times fours yearsof school, and you could spend $73,092 on your students education.

But dont panic. When sticker shock happens to car shoppers, they almost immediately remembertheir trade-in, which reduces the price of a new car significantly. They also begin deciding whatoptions they can do withoutleather interior, air conditioning, that computer voice telling you

that your car door is open. Factor in special rates, discounts, and dealer reductions, and thedifference between a cars sticker price and what youd actually pay can be quite different.

The same is going to be true for college, without the salesmen, balloons, or haggling. Instead ofhaving a trade-in, you and your son or daughter will have financial aid to reduce the cost youre

quoted. Just as you may do without leather seats,

your son or daughter might be able to do withoutthings like the most expensive meal plan or atelephone in his or her dorm room. Also, discountsand reductions are available to some students in theform of grants or scholarships. So take a closer lookat all your prospective colleges, and dont dismiss any

one on the sticker price alone.

The Flip Side of the Coin

However, the unfortunate reality for most families is that cost is a very real factor in collegedecisions. Wait a minute,youre probably thinking. Didnt I just read that I shouldnt dismiss acollege based on cost? Yes, you did, but its important to understand that these two statementsdont contradict each other.

Samuel Ellison, a student employment manager and financial aid adviser at Morehouse College

notes that its financial aid that plays a factor in affording college, not cost. If you toss out aprospective school based on cost alone, youll never find out if your student will be offeredscholarships, receive a significant amount offinancial aid, or what financial aid doors may open toher. In other words, a college thats much more expensive than your other prospective schools mayoffer more financial aid to make themselves competitive. But youll never find out if your studentdoesnt apply there.

The bottom line is, dont let cost alone keep your student from applying to that expensive school.But once the acceptance letters arrive and you start getting financial aid offers, then youll have tolook at the reality of what your family can afford. Well go into more detail about this later, but fornow, remember to keep your options open.


14

Tuition Guesstimates

Many parents misjudge tuition costsby as much as 50 percent in eitherdirection, according to a 2003 HarrisPoll.


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MOVING ON

To wrap up, we began by looking at the current financial state of colleges, so that youll have a better

understanding of why college seems to be so expensive, and why it may keep getting more costly.We debunked a few myths about financial aid, but also looked at how almost no one pays the fullprice of college. To explain this, we compared colleges to cars, discussing the difference between asticker price and what students and families actually pay. And although cost alone should notkeep a student from applying to a school, we acknowledged that its a very real and important factor

for almost everyone when going through this process.

In the next chapter, well look at the different college options open to your son and daughter, anddiscuss the decisions involved and how to factor costs and aid into the equation. Well look at thedifferent types of schools, includingdream schools and financial safety schools. Well discuss howto get your son or daughter involved in all aspects of the decision-making process, including the

financial ones. But before you move on, take a look at the checklist for this chapter.


15

CHECKLIST:

1. Begin educating yourself about the financial issues facing universities. For example

Is your state planning on cutting back university funding?

Are tuitions expected to increase drastically in the next few years?

Changes taking place now may affect your sons or daughters education as early as

next year, and it helps to be informed.

2. Begin looking at your familys budget, and find ways to save money or cut expensesin light of upcoming college costs. For example

Can you put money aside each month to help with college?

Are there expenses that can be reduced or cut to help out?

3. Contact all your potential colleges to determine if their financial aid is need aware orneed blind. If they are need aware, ask for information or request any additionalforms that might be necessary. Keep notes of your findings.


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WEBSITES

FinAid

www.finaid.org

U.S. Department of EducationStudent Guide to Financial Aid

www.ed.gov

EdFund

www.edfund.org

SallieMaewww.salliemae.com

NellieMae

www.nelliemae.com

National Association of Student Financial Aid Administrators

www.nasfaa.org

Financial Aid/Admission Awareness Month

www.faam.org


16


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17

CHAPTER THREE

Finding the Best Value

Although you may not realize it, there are many different kinds of colleges, each creating a differentfinancial picture for your family. The first decision your son or daughter will have to make is what

kind of college he or she wants to go to. Well look at the options, including the best values for yourstudents goals and your bank account.

TYPES OF COLLEGES

In the broadest sense, college is simply where your student will go after high school to continue his

or her education. From this view, there are three basic kinds of schools your student could attend:a traditional four-year college, a career college (or trade school), or a community college.

Four-Year SchoolsThe traditional American college is a four-year institution accredited by a recognized accreditingagency (this means the school has passed a review and meets certain standards of educationalquality). These schools offer a bachelor of arts (B.A.) or bachelor of science (B.S.) degree.

Public versus Private

Four-year schools are either public or private, and the two are very similar with one exception.Public colleges and universities receive substantial financial support from state and federal

governments through tax dollars. Private colleges and universities may or may not; when they do,they usually receive less than public institutions.With some notable exceptions, youll find few basic

differences between public and private colleges, except for the cost. Private colleges are usuallymuch more expensive than public ones, with higher student fees and tuition making up for the lossin government aid. However, with states facing budget shortfalls, public schools are now raisingtuitions at a higher rate than private schools.


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Ellen Frishberg, director of Student FinancialServices at Johns Hopkins University points out one

of the biggest differences between public and privatecolleges. I see a lot of people who dont understandthe different costs of public and private schools, andexplaining these differences is really necessary. Astaxpayers, people pay subsidies to public schoolsthrough their taxes, which reduces their costs to

students. So really, when you take those taxes intoaccount, public colleges cost about the same asprivate schools. Its just that youve already paid somemoney through your taxes.

Most of the time, private schools tend to be thought of as more prestigious than public colleges.

After all, Harvard, Stanford, and Yale are all private universities, as are other Ivy League schools.Butits important to note that not all private universities are the same. Research has suggested thatmediocre private schools may not offer a better education than a good public college. Also,depending on your students future plans, even a top-notch private school may not make adifference. For example, a Yale degree wont make much difference if your son or daughter plans onbecoming a minister, elementary school teacher, or social worker. So while you shouldnt rule out

private colleges because of their cost, you also shouldnt assume that private schools always providea better education.

In addition, a private college, when aid and loans arefactored in, may be less expensive than a state school,

especially an out-of-state school. A friend of mydaughter lives in North Carolina, says Connie

Gores, vice president for enrollment at Randolph-Macon Womans College, and she applied to bothin-state and out-of-state schools. The out-of-stateschools accepted her, while the in-states didnt. Sonow, shes having to choose between options thatreally may not be the best fit for her, and because

the family assumed that private college would be tooexpensive, she didnt apply to any.

So despite that churning in your stomach, dont automatically assume a particular college shouldntbe considered because of cost. Regardless of sticker shock, you should compare state schools toprivate schools to see what you can afford. This early in the process, dont let price stand in your

way. Several factors will influence your final decision, and cost is just one of them.


18

Public and Private College Tuitions20022003 versus 20012002

At 4-year private institutions, tuitionand fees averaged $18,273, up from$17,272 (a 5.8% increase).

At 4-year public institutions, tuitionand fees averaged $4,081, up from$3,725 (a 9.6% increase).

Source: Trends in College Pricing 2002,

Collegeboard.com

Thats Why They Make the Big

Bucks

A 1998 study found that in most cases,graduates of elite universities madehigher incomes not because of where

they went to college, but because ofthe individuals intelligence andattributes.

Researchers: Alan B. Krueger and Stacy B.

Dale, the Andrew W. Mellon Foundation


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In-State versus Out-of-State

This may seem obvious, but an in-state schoolsimply means it is in the same state as where you live.If your son or daughter leaves their home state to goto college, it is considered out-of-state. These termsare used to refer to both students and colleges. Theseterms exist because most colleges charge out-of-statestudents a higher tuition than in-state students. This

is based on the idea that in-state students alreadygive the college some money by paying state taxesthat are passed on to the college. Some schools,however, offer a good neighbor tuition break tostudents from nearby states, sometimes charging only in-state tuition, especially for students withhigh grade point averages or SAT scores.

Its important to note that any combination of these four terms can be applied to a college. Yourstudent could go to an in-state private school, or an out-of-state public school. The important thingto realize is that while these words describe a type of college, no one type is better than another.

Community Colleges

For students who cannot attend a four-year college for any number of reasons, community collegesprovide an extremely affordable option. Designed for students living at home (and saving fees for

room and board), they offer a two-year degree (called an Associates degree) that can mirror the first

two years of education a student would get at a four-year college; alternatively, students can enroll incareer-oriented programs, studying for professions that are in high demand in technology, alliedhealth, and otherfields. Community colleges also offer remedial study in preparation for college work.

Community College Costs

0

2,000

4,0006,000

8,000

10,000

12,000

14,000

16,000

18,000

1964

......

1968

......

1972

......

1976

......

1980

......

1984

......

1988

......

1992

......

1996

......

2000

......

Community College (Public 2-year)

Public 4-year

Private 2-year

Private 4-year

In-State Tuition and Required Fees

Source: National Center for Educational Statistics


19

Room and BoardFood for Thought

At 4-year private colleges, 2002-2003room and board averaged $6,779, upfrom $6,479 (a 4.6% increase).

At 4-year public colleges, room andboard averaged $5,582, up from$5,266 (a 6.0% increase).

Source: Trends in College Pricing 2002,

Collegeboard.com


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20

BEST VALUES

Guidance counselors from across the nation call the following schools the best values for quality ofeducation versus price:

Results from Kaplans2003 National Guidance Counselor Survey(a scientific survey conducted by MarketMeasurement, Inc.) from The Unofficial, (Un)Biased Guide to the 328 Most Interesting Colleges, 2004 Edition.Best Values is one of 15 guidance counselor lists including Hidden Treasures,Hot and Trendy,Overrated,Underrated, and Peter Pan (low four-year graduation rate schools).

Arizona State University AZ

University of MichiganAnn Arbor MI

University of Virginia VA

University of MinnesotaTwin Cities MN

Grove City College PA

Rice University TX

University of MarylandCollege Park MD

Georgia Institute of Technology GA

Penn State UniversityUniversity Park PA

University of Delaware DE

University of Arizona AZ

University of Nor th CarolinaChapel Hill NC

Indiana UniversityBloomington IN

University of Oklahoma OK

University of WisconsinMadison WI

University of Pittsburgh PA

Rutgers UniversityNew Brunswick NJ

University of Iowa IA

University of Alabama AL

University of Georgia GA

Spelman College GA

Miami University OH

Oklahoma State University OK

Auburn University AL

Baylor University TX

University of TexasAustin TX

Mississippi State University MS

Hampton University VA

West Virginia University WV

Florida State University FL

University of South Carolina SC

Truman State University MO

University of ColoradoBoulder CO

University of Idaho ID

Eastern Michigan University MI

Louisiana State University and A&M College LA

York College of Pennsylvania PA

Murray State University KY

Duke University NC

Purdue UniversityWest Lafayette IN

Winona State University MN

University of MissouriColumbia MO

Washington State University WA

Florida A&M University FL

Roanoke College VA

Penn State UniversityErie PA

University of Washington WA

Clark Atlanta University GA

Concordia College MN

Northwest Missouri State University MO

State University of New YorkGeneseo NY

Keene State College NH

South Dakota State University SD

University of North Dakota ND

University of Wyoming WY

Albertson College of Idaho ID

University of Connecticut CT

University of New Mexico NM

University of New Hampshire NH


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Many students who finish a two-year community college programusually in the lowest pricerange for any higher educationare able to move on and receive their Bachelor s degree after two

more years at a traditional college, saving thousands of dollars.

Career Colleges

Career colleges (also known as technical institutes) are postsecondary institutions that providetraining for skill-based careers in law, business, information technology, health care, criminal justice,and more than 200 other fields. In contrast to community colleges, which are usually funded by stateor local governments, career schools are independent, privately-owned institutions. Career schoolsaccount for 47 percent of all postsecondary educational institutions in the United States. At many

career schools, the majority of programs are related to one career field, such as health care (MaricCollege in San Diego), business (Nebraska School of Business in Omaha), or automotive (Wyoming

Technical Institute in Laramie). Other career colleges offer training in multiple fields, with onlinestudy options. Programs in allied health, arts and sciences, criminal justice, design and graphic arts,information technology, paralegal studies, and travel and tourism are among those available.

Career colleges primarily offer occupational degrees, rather than the academic degrees offered bycolleges and universities. The training is much more focused on the practical skills and knowledgeneeded for a specific career. If what your son or daughter wants is practical training for a specificcareer, a program at a career school might save him or her time: Depending on the profession andcollege, a student may attend for as little as eighteen months. And a student who attends a programon radiation therapy, for example, can earn as much as a graduate of a traditional college.

Tuition for career colleges can vary widely, so before you commit to a loan,fi

nd out how long theprogram takes to finish and how much it will cost. Look into whether the school offers scholarships,and what other types of financial assistance are available. Check the schools accreditation:Accreditation by a reputable national or regional accrediting body means the school has passed athorough examination of its educational quality. Besides ensuring quality, accreditation by one ofthe accrediting bodies recognized by the Department of Education means that students can qualify

for federal financial grant and loan programs.

OTHER OPTIONS

College AbroadWhile study abroad doesnt describe a certain type of college, it refers to students who continuetheir education outside the United States. In fact, study abroad can refer to almost any type of

college weve mentioned. More and more students are attending colleges in Canada after realizingthey can get a similar education to schools in this country while paying significantly less money.


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Adventurous future chefs may become expert increating pastries by studying in Paris, while a future

translator for the United Nations may become fluentin German by attending a college in Berlin. Also,many United States schools offer a semester or yearof study abroad at a cooperating institution in thehost country. Such a semester can prove to be anadded expense to be factored into your college cost

equation if your son or daughter has his or her heart set on it, but bargains are available for thosewho plan ahead. Check if the tuition you will pay for study abroad will be that of your sons ordaughters primary school or the host school abroad. Its possible to save money if the foreigninstitution charges a lower tuition.

Online Programs

Online programs have become increasingly popular in recent years because they break many of thebarriers people confront when trying to enroll in traditional college programs. Online students can

study anytime, anywhere. Tuition for online schools is competitive when compared to traditionalcolleges and universities. Many online institutions also offer scholarships, payment plans, and othermethods of making tuition payment more convenient. However, while online degrees are gainingin acceptability and even status, they may not be as attractive in the job market as a regular degree.

If youre looking at an online school, investigate its accreditation: Just like traditional on-ground

schools, some online schools are accredited and some arent, or only specific programs have

received accreditation.Accreditation is a sign that the school is serious about education and ensuresthat high academic standards are maintained. Sometypes of accreditation allow the school to takeadvantage of federal financial aid programs, so checkwith the institution youre considering to see if itoffers such aid.

Since the majority of students attend traditional four-year and community colleges each year, thegovernment forms and requirements we will discusslater on will be applicable to them. But if your son ordaughter is attending one of these other types of

colleges, this book will still be helpful.Were also goingto discuss everything from private loans to grants andscholarships than can help you no matter where yourstudent is going to get his or her education.


22

Canadian Bargains

In 2003, prestigious McGill Universitycharged international students (thatincludes Americans!) $6,900$7,300

tuition for most programs.

Check Out the Financial Aid Office

You really need to see how youretreated by the financial aid officebefore you apply, because thats agood indicator of how much help

youll receive, remarks financial aidofficer Connie Gores, parent of acollege-aged daughter. If a financialaid office isnt helpful and treats you

like just another number before yourstudent even goes there, you can betitll be worse if your student attends.


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GETTING YOUR STUDENT INVOLVED

Very few students know for certain what they want to do with their lives after graduating from

college, and odds are, yours may feel the same way. (If not, great! Your problems arent completelysolved, but youre off to a good start.) So before we even get into financial aid, budgets, and loans,its essential to make sure you and your son or daughter are on the same page to avoid futureheadaches and wasted time.

As mentioned in the introduction, this book isbased on the idea that affording college is theresponsibility of both you and your student. Afterall, the decisions youre making affect them asmuch as you. So if you havent already talked aboutcollege with your son and daughter, its time to get

started. Were not starting with anything thats toodifficult or that may cause an argument, but withbasic ideas your student needs to understand.

Does Your Student Know What He

or She Wants from College?

This doesnt mean they have to choose a majorright now, of course, but do they have any idea of

what they want to study? Is your son torn between acting and writing? Maybe your daughter wantsto go into science, but loves both chemistry and math.

What about sports or activities? Does your student want to play tennis for his college? Maybe shesthinking about moving on from playing around with your home video camera into learningfilmmaking.

Then again, some students have a better sense of what they dont want, rather than what they do.Its not uncommon for a student to insist that he attend an out-of-state college because he wants tobecome independent from his family. Still others may have a certain area of the country in mind,or even a city where they want to go. An actor may want to attend college in New York or California,or a future politician may want to get an education near Washington, D.C.

The point is, your student probably has some idea of what she wants from college, even if she hasnttold you about it. A desire to go into a certain field or live in a certain place will impact not only thecost you two will pay for college, but also the types offinancial aid youll qualify for. So be open towhat your student may say.


23

TRENT & SEPPY SAY

Trent:

If you and your son or daughter talk aboutfinances before college applications go out,chances are you'll both be happier in the longrun.

Seppy:

There's no problem with applyingto a dream school if you have asafety school just in case


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Unfortunately, money is going to be a significant factor in this decision. So while you and your sonor daughter should by all means consider prestigious, more costly universities, its also necessary to

develop a game plan to ensure your student attends college no matter what happens. To that end,here are four things you need to look at if you intend to cover all your bases.

Local Colleges and Universities

Odds are you have at least one, if not a few, colleges in your area. They may be in your town, a fewmiles down the road, or within walking distance of your home. Regardless, you and your son ordaughter should consider these local schools as you look at colleges. Granted, most students dream ofleaving home and going away to college, but local universities often mean significant savings for thestudent and parent.

Living at Home

One of the main reasons local colleges are appealing for many families is that the student cancontinue to live at home. Rather than pay for room and board, not to mention things like travel,phone calls, and food, your family doesnt incur any increase in living expenses from this option. Infact, the expenses youll face if your student remains at home may be significantly less than thosesame expenses if he were to go away. Naturally, this shouldnt be a deciding factor in your selectionof schools, but it is one advantage to attending a local school.

Part-Time Work for Students

Another aspect to this game plan is that awful four-

letter word: work. Ideally, most people agree that a

student should focus her time on studies, notbabysitting, working the counter at a video store, orspending her weekends waiting tables. But just a fewhours working each week can make a significantimpact in college-related expenses. Textbooks can bepaid for, gas and car insurance can be bought, and

other such incidentals can be handled without youhanding over money. Most importantly, disciplinedstudents all over the country work part-time whilegoing to school, with little impact on their grades.

The Financial Safety SchoolFinally, theres the idea of a safety school. Traditionally, this has meant applying to a college thatthe student feels fairly certain will accept them.Yet, a safety school should also be one that you know

your family can afford. After all, a college thats completely out of your price range isnt verysafe,

is it? In most cases, safety schools are public, located in the familys area (within driving distance),


24

Work Ethic

According to some schools, workingcan actually be good for your student.Research has shown highersatisfaction ratings and a betterpercent of matriculation when acollege student is working, says EllenFrishberg, director of Student FinancialServices for Johns Hopkins University.


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and offer financial aid to the majority of their students. Students who attend their safety schooloften live at home for the first few years to save on costs.

The bottom line is youll need to discuss each of these options with your son or daughter and developa safety school as part of your overall plan. Some students attend their safety school (be it a localuniversity or community college) for a few years, then transfer to their dream school to receive theirdegree. So remember that attending a safety school does not necessarily mean settling, since its oftena temporary compromise on the way to getting a degree.

Does Your Student Understand the Costs Involved in Going to College?

While your student may hold a part-time job, file his own taxes, or make his own car payments, he

probably doesnt have experience dealing with loans for large sums of money, creating a budgetmeant to last a year, or stretching money by reducing expenses. Because of this, the high cost of

going to college may not be a reality to him. It doesnt take new drivers long to learn that carexpenses are costly and gas isnt free. By bringing your student into the financial aid process, theresa good chance hell quickly learn just how large a sum of money is involved.

There are parents who give their kids a free ride to college, offers Karon Ray, who has put twochildren through college (one has finished and one has completed two years), with another oneabout to start. The problem is that they graduate from college having never done a budget. Karonand her husband, an Army officer, set aside for their three children a lump sum of money before theystarted college, but didnt tell them how to use it. So really, our kids faced the sticker shock beforethey started classes. They had to decide if they really needed that high-end computer, or should be

saving money for the next semester. Basically, its about teaching them that things cost money.

Explain to Your Student That Loans Are Going to Be Their Responsibility

Nothing is more frightening to a free-wheeling college student than seeing how much she owes instudent loans. Well get into loans in more detail later in the book, but for now, its important forboth you and your student to realize that federal loans are going to be in the student s name. Themost important reason your student should want to be involved in this process is because the debtshes creating is going to be her responsibility in a few short years.

Do They Have Realistic Expectations of College?

This is probably the hardest thing for students to realize. In high school, college represents freedom,choices,independence, and a lot of fun.And while were not suggesting you become a stick in the mud

and lecture them on the consequences of slacking off, dont let them forget that every once in a whilethey will have to study, papers will have to be written eventually, and exams are going to be difficult.

Although it may not seem obvious, each of these points should lead into the next one. A studentwho has an idea of what she wants from college is going to be more willing to take part in the


25


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financial aid process. A student whos involved in the process is going learn (very quickly) thatmuch of the cost will be her responsibility, and a student whos aware of her financial obligations

will have a more balanced expectation of what college is about.

MOVING ON

To wrap up, in this chapter we reviewed the types of colleges out there with a look at their

comparative costs. We discussed the traditional four-year schools, community colleges, and thenontraditional study options such as career colleges, online study, and attending college in a foreigncountry. We discussed how the type of college might affect the cost of higher education, andrecommended having a serious discussion with your son or daughter to get them involved in thefinancial side of a college decision. We introduced the concept of a financial safety school, and howstudents can help ease the economic burden by living at home, working, and understanding that

loans will be their responsibility.

In the next chapter, well talk more in-depth about the difference between a colleges sticker priceand the actual amount you can expect to pay. Youll begin breaking down different costs andcomparing how these can differ from college to college, as we teach you how to determine the actualcost of college for you and your student.


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27

CHECKLIST:

1. Begin talking with your son or daughter about the types of college he or she might

be interested in.

Do they want to go in-state, or out-of-state?

Attend a public school or private?

2. Begin comparing the costs of colleges in your state, as well as other states yourstudent is interested in. For example,

Are universities in your state cheaper than neighboring states?

How do out-of-state tuitions in other states compare to in-state tuitions in yourstate? Are good neighbor or regional tuitions available?

3. Determine and select a safety school with your student. As you do so, discuss thefollowing:

Is there a nearby college they could attend?

Will they be willing to live at home if need be?

Are they willing to work part-time if they stay home?

4. Perhaps your student is interested in a visual art school, an acting school, or a careerschool.

Discuss the pros and cons of each, and begin a list of possible schools.

5. Talk with your son or daughter about the financial side of attending college. Discusshis or her expectations for college, as well as the possibility that most of the loansand financial burden involved will become his or her responsibility after graduating.Encourage him or her to take an active part in this process, and help him or her

understand why it is worth his or her time.


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28

WEBSITES

National Center for Public Policy and Higher Education

www.highereducation.org/

American Association of Community Colleges

www.aacc.nche.edu/

Association of Universities and Colleges of Canada

www.aucc.ca/

Study Overseaswww.studyoverseas.com/

The International Education Site

www.intstudy.com/

CollegeLink

www.collegelink.com/

Office of Postsecondary Education Accreditation Information

www.ed.gov/offices/OPE/accreditation/


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OVERCOMING STICKER SHOCK

So far, weve looked at the big picture when it comes to financial aid, and you should have a goodidea of what to expect, as well as what your options are. In this chapter well start on the nuts andbolts of the process, which means numbers. Fortunately, if you can balance a checkbook, you cando the calculations necessary to get through this process. Having said that, grab a pencil and some

paper, a calculator if youve got one, and read on.

In chapter two, we compared the price of collegeto that of a car, explaining that both have stickerprices which usually vary greatly from the actualcost itself. But in order to compare the sticker

price quoted by a university to the actual cost of

your college, youre going to have to break it intoseparate parts (just as the sticker price of a car isbroken down into parts).

While you may not be looking forward to doingthis, its essential for making an informed choice

of which college is best for you and your son ordaughter. Sometimes costs change, estimatesmay not include additional fees that impact you,and housing expenses can vary greatlydepending upon the selections chosen by a

student. In fact, most housing costs you see arebased on an average which means you may end up

paying more or less than that amount depending upon your choices. You wouldnt sign a car loanif you had only an estimate of what youd be paying, so why do it for a college?

29

CHAPTER FOUR

Calculate the Real Cost

of College

TRENT & SEPPY SAY

Trent:

Lots of parents panic when it comes to creating abudget or filling out financial aid forms. Thetruth is, the math on your students SAT washarder than what youll be doing, so dont worry!

Seppy:

And if you believe two heads arebetter than one, ask your studentto double-check your math.Compared to the SAT, this stuffshould be a piece of cake!


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This chapter will open your eyes in determining whats needed and whats not when it comes toyour students college education (leather seats, anyone?). Youll be creating worksheets that list all

these costs, so you can do a side-by-side comparison of each school youre considering. But beforeyou actually start crunching numbers, lets take a look at the different types of expenses youll needto know.

DIRECT VERSUS INDIRECT

When it comes to college, the terms direct and indirect are used by financial aid administratorsto define costs. Essentially, every cost associated with college falls into one of these two categories,and theyre easy to understand.

Direct CostsDirect costs are directly related to your students education and are usually paid to the school itself.There are four types of direct costs.

Tuition

This is the amount that a college requires from all students in order to attend class. At some colleges

its a flat rate, while others charge depending on how many credit hours (classes) your son or daughtertakes.Tuition also varies depending on whether or notthe school is public or private, and whether or not

your student is in-state or out-of-state. (For

definitions of these terms, see chapter three.)

Be sure to determine the exact amount of tuition foreach college youre considering, since they varygreatly. If a school bases tuition on the studentsnumber of credit hours, assume 15 credit hours persemester.

Fees

For every college, there are some fees that must be paid simply because your child will be a studentthere. They may be named differently from school to school, but most provide funding for general

expenses a college incurs. Other fees can vary depending on a students major or their activities.

Student service fees are related to activities that your student may choose to participate in, such assports, performing groups, or clubs. These fees may be optional depending upon the college. Class-related fees are most commonly found in the arts and sciences. For example, chemistry majors may


30

Get Credit

Every class is broken down into credit

hours, which reflect how long theclass is and how much time it takesout of the students schedule. Mostclasses are 3 credit hours, and moststudents take an average of 45classes each semester.


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pay additional fees to cover laboratory and chemicalcosts. Likewise, a photography major will likely pay a

fee to cover costs associated with developingpictures.

Textbooks

Often underestimated, textbooks can cost hundredsof dollars a semester. English and literature majorsmay have to buy dozens of novels, while historymajors can expect thick books that would give aweightlifter a workout. Most colleges provide an

estimate, but its almost always too low. An accurateexpectation is $1,500$2,000 per year, but this can

increase by as much as 30 percent with the additionof just a few books! To be safe, assume $800 for yourstudents first semester, and adjust accordingly.

When you visit colleges, visit the bookstore on campus, suggests parent Joe Sanseverino. Thatwas a real eye opener of us! Youll be shocked the first time you see a book cost $150.

Supplies

These costs usually impact art and sciencemajors, and reflect equipment that the universitydoes not provide for the student. For example, art

majors usually must provide their own paints,sketch pads, pencils, and erasers, while chemistry

majors usually provide their own safety glassesand calculators.

Indirect Costs

Indirect costs are all the other expenses related toattending college, such as room and board, travel,and personal expenses.

There are seven types of indirect costs:

Room

Simply put, this is where your student will live.Most colleges refer to this as housing, and there

Calculate the Real Cost of College

31

TRENT & SEPPY SAY

Trent:

Never underestimate the advantages of buyingused textbooks, which can significantly reduceyour costs. Also, search the Web for online textbookstores, which offer competitive pricing (but watchout for shipping!). Even Barnes & Noble and eBayusually have textbooks available.

Seppy:

Borrowing a friends book andphotocopying it, however, is not

recommended. Not only is itillegal, but imagine the time youdspend on a 500 page book aboutChinese history!

Cost It Out

Some schools do a really good jobof mapping all their costs out, saysfinancial aid officer Connie Gores.Those kinds of costs should alwaysbe in the catalog, or easily availablefrom the school. If a college isnt able

to share prices for fees or other costsbeyond tuition and room and board,

then you should think strongly aboutthat school. This is a good indicatorof how helpful a financial aid office

can be.


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are two types: on-campus and off-campus. On-campus means your student lives in a collegeresidence hall (dorm for short), and you pay a lump sum to the college each semester. In turn, the

college pays all the bills associated with the housingheat, hot water, electricity, etc. Most often,your student will share a room with one or morestudents. Off-campus means your student lives in anapartment or house literally off the colleges campus.Students living off-campus can expect increasedresponsibilities such as monthly bills, grocery

shopping, and rent.

It may be easier and more convenient for your studentto live on campus, especially if they are about to starttheir first year of college. But dont assume living oncampus is always cheaper. Especially at urban colleges

in large cities, campus housing can be limited andexpensive compared to local apartments. Also, find out if close friends of your student are attendingthe same college. If so, would it be cheaper for them to share an apartment? In rare instances, someparents actually buy a small house or apartment near campus. The student then lives there, and theother rooms are rented out to help make mortgage payments. Parents with experience in real estatecan actually make money from such an investment.

Board

Youve probably heard the term room and board before, and while room is self-explanatory, board

refers to food. Meal plans are offered by colleges, allowing students to eat at campus dining halls

without paying out of pocket. Some colleges charge a flat rate for meal plans, while others offer afew varieties depending on how often the student expects to eat there.

Many people dont understand that tuition and room and board are two different things, saysConnie Gores of Randolph-Macon Womens College. One of my daughters friends received a

scholarship covering half her tuition, and her familythought that it would pay for half of the cost of thecollege. They didnt realize room and board was inaddition to tuition costs.

Its important to realize that meal plans only cover

food your student will eat at the dining hall, so youllalso need to account for snacks, dining out, and theoccasional pizza delivery.


32

How Much DoesAnimal House Cost?

Many colleges require that freshmen liveon-campus, so be sure to check witheach school youre considering. Also,on-campus housing costs for a collegecan vary depending on residence hall.Some dorms may cost more because

theyre newer or more convenient tocampus, so be sure to ask!

It Pays to Itemize

Some colleges combine room andboard into one cost on their literature,so check your brochures to see if yourprospective colleges have done this. Ifso, request a breakdown of these twoitems.


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Transportation

This covers the costs associated with your son ordaughter getting around campus and the area wherethe college is located. Often, this is minimal, sincemany students living on-campus simply walkeverywhere. However, this could include a bicycle,public transportation, or a car. If your studentintends to have a car while in college, youll need to

also factor in the cost of gas and insurance in thisamount.

Travel

The cost of travel can vary greatly depending on how far away your students college is, as well as how

often they plan to come home. If your student is attending a college in your state, you may chooseto drive to campus and pick him or her up for a holiday or long weekend with the family. But if yourstudent is attending a university on the other side of the country, he or she will likely be flying homefor visits. Only you and your son or daughter know how often he or she will travel, and how he or

she will chose to do so. Unlike other costs, youll find that travel expenses can vary greatly fromschool to school.

Personal

This area is usually one of the most flexible when it comes to determining how much college willcost. Personal expenses can cover everything from long distance phone calls to entertainment,laundry, shopping, and gifts. Most parents look at the students spending money, and chose a set

amount designed to last the semester.

To best determine how much you and your student will need to allocate for personal expenses fora semester of college, look at how much your student currently spends per month and multiply byfour (since there are just under four months in a semester). Youll probably want to increase thisnumber slightly to cover non-fun things like laundry, phone calls, and toiletries.

Medical and Dental

Although its often overlooked, youll need to determine how much your students medical anddental insurance will be. If your student is currently covered by your employers insurance, youll

need to find out if they are still eligible once they go to college. Depending upon your insurance,you may have to pay an extra fee, or your student may not be covered at all.

Most colleges offer health insurance, so if your current health plan will no longer cover your son ordaughter, check with prospective colleges to find out what your options are.


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Car Culture

Some colleges do not allow freshmenwho live on campus to have cars. So ifyour student plans on having one, besure to check with your prospectiveschools.


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Miscellaneous

While it sounds vague, miscellaneous expenses are everything else that goes beyond the basic costsof attending college. This can include fraternity or sorority dues, athletic expenses associated withplaying a sport, clubs, tutoring, and costs associated with summer programs. Students with

disabilities would add any additional expenses inthis category.

Miscellaneous expenses usually are not as flexible

as personal expenses, since reducing this amountmeans the student must give up sports, clubs, oractivities. But while this number can vary fromschool to school, youll likely include the samethings for each college. (In other words, if yourstudent plans to try out for the tennis team, theyll

likely do so regardless of which college theyattend.)

CALCULATING INFLATION

If your son or daughter is in his or her senior year

of high school, inflation wont impact yourworksheets. But if your student has a few yearsuntil he or she starts college, youll need to factorthis in.

Inflation is an estimate of how much the cost of

something will increase over time. We all knowthat a pack of gum costs more today than it did

twenty years ago. Thats inflation,and it affects everything. So if your student wont be starting collegein the immediate future, youll want an idea of how much her education will cost once she starts.

The national average increase for the cost of college is 6 percent every year, so if your student is

planning to start college in two years, you can expect to pay 12 percent more than what collegecurrently costs. Take a look at the following chart that gives an inflation factor,which youll be usingat the end of this chapter (unless your student starts college next year).


34

TRENT & SEPPY SAY

Trent:

Many airlines, bus lines, and trains offer studentdiscounts with a college ID, so consider severaloptions when planning your students travel.

Advance tickets can also save money, especiallywhen planning for the holidays.

Seppy:

Actually, college students getdiscounts on just about anythingif they have their IDtheatertickets, hotels, stores. In fact,Hollywood director Kevin Smithsupposedly stayed in film school

just because of the discounts he

got when buying film to make hisfirst movie!


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YEARS BEFORE STUDENT STARTS COLLEGE INFLATION FACTOR

1 1.06

2 1.12

3 1.19

4 1.26

5 1.34

6 1.42

7 1.50

8 1.59

9 1.69

10 1.79

11 1.90

12 2.01

13 2.13

14 2.26

15 2.40

16 2.54

17 2.69

18 2.85

To use this chart, youll simply find the inflation factor for the number of years your son or daughterhas until he or she starts college, and multiply that inflation factor by the total cost of his or hereducation. (Not only will the cost of tuition, room, and board go up, but so will everything else.)

For example, if a student has three years until they start college, and the cost of attending aparticular college is currently $25,000 a year (including indirect costs such as travel, personal

expenses, etc.), then the costs associated with attending that same college would be $29,750 in threeyears. The chart above shows the inflation factor for three years is 1.19, so

$25,000 1.19 = $29,750

Remember that this provides an estimate, so the actual cost may be more or less than this number

(but youll likely be close).


35


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THE ACTUAL COST OF COLLEGE

At the end of this chapter youll find a worksheet created to help you keep track of all these

expenses. Its called the Cost of Attending (COA) worksheet, and youll need to do it for each collegeyou and your student are considering. You may want to photocopy the worksheet, or create yourown on your computer, or maybe you prefer to write everything out on a legal pad or notebook. Itreally doesnt matter, as long as you have everything written down and accounted for.

As you fill out these worksheets, be sure to keep your notes and calculations that so that youllremember how you got each number. For example, if personal expenses include the cost of a cell phone,or transportation expenses include the costs associated with your students car, write that down withthe amount you expect to spend for each.As youll find out in a minute, these notes will come in handy.

According to Karen Krause, director of financial

aid at the University of Texas at Arlington, schoolsshould offer average numbers to help you calculate

your COA worksheet. Most schools should beable to give you ballpark figures, she explains.Forexample, we recently did a bookstore survey thatlooked at textbooks for six different majors atdifferent years in college. We then used these to get

an average cost for our students.

Since youre going to fill out these worksheets foryour colleges, this might be a good time to

organize everything you have so far. Youveprobably got brochures, letters, forms, and notes

from each college you and your student areconsidering. Since these Cost of Attendingworksheets will be compared side-by-side, werecommend taking a few minutes to organize thebulk of information and papers youve got. Use

whatever works best for you; regular folders, big

legal-sized envelopes, one of those accordion folders with different sections. But whatever you use,its a good idea to separate these papers by college so that youll be able to easily find things later.

STUDENT INVOLVEMENT

Finally, if you havent already realized it, this is where you really need to make sure your son or

daughter is involved. The numbers you come up with on the Cost of Attending worksheets aregoing to be largely impacted by the choices your student makes. Without their involvement and


36

TRENT & SEPPY SAY

Trent:

By keeping your calculations for theseworksheets, youll be able to go back later andmake adjustments to certain expenses withouttrying to remember how you came up with yournumbers.

Seppy:

Dont feel like you have to gooverboard, though. These areestimations, so you dont need 8

pages of numbers about howmuch fast food your student eatsa month.


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input, you might as well be guessing, which will make the process of affording college much moredifficult. For example, will your student want to join the Greek system? How often does he plan to

eat out? If she wants to attend a college in a major city, will she use public transportation to goexploring off campus? What about phone calls? How often will he call home?

The bottom

straighttalk on paying for college

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